Economist cautions gov’t over bailing out victims of financial scams

Professor of Economics at the Institute of Statistical, Social and Economic Research (ISSER), Professor Peter Quartey, has cautioned government against bailing out customers of financial scams in the country.

According to him, government’s decision to pay customers of DKM for the losses they incurred when the company collapsed, will only encourage other victims of similar scams to demand for help from the government, and will also threaten governments fiscal position.

In November 2018, during the budget presentation in Parliament, the Finance Minister, Ken Ofori-Atta disclosed that about 80 percent of funds owed DKM customers had already been settled.

He said the official liquidator received 99,858 claims and the validated claims amounted to GH¢502 million.

“I would like to inform the country that out of the 99,858 claims, 79,708 (80 per cent) have been settled and depositors have been paid” Mr. Ofori Atta stated.

The Finance Minister revealed that, government has set aside funds at the Bank of Ghana to pay the remaining 20 per cent of depositors upon validation.

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“An additional 12,612 claims have been fully provided for, but the customers have not as yet been able to show proof of deposit. This means that 92 percent of DKM claims from depositors have been paid or provided for. Depositors for the remaining 7,568 claims of above” Ken Ofori Atta stated.

However, speaking to journalists on the sidelines of ISSER’s post-budget forum, Professor Quartey urged government to make the reimbursement of DKM customers the last time it pays victims of such financial scams.

“The DKM payment is a campaign promise, and from what we heard from the budget Government has already paid the majority. But going forward I don’t think we should encourage that kind of payment. Yes, there is an element of greed. If you recall in the case of Menzgold, the Bank of Ghana came warning customers and the customers rather went on rampage demonstrating and attacking Bank of Ghana. Now that they’ve hit a wall they want the Central Bank to come and bail them.”